Waddell & Reed Financial Inc. (WDR)Buy PresentationJanuary 19, 2012

Highly competitive industry, but offers significant economic profits (ROIC > WACC)

3 Levers for Earnings Fund Flows Market Appreciation Economies of Scale (Operating

Leverage)

Asset management and financial planning Ivy Funds and Waddell & Reed Advisors Funds Consistently ranked in top decile for fund families Historical focus in large cap growth equities

Distribute funds through Advisor, Wholesale, and Institutional Channels

Future growth catalysts – promote Ivy Funds brand and focus on diversification of product line

Advisors channel was historically chief source of fund flows Sticky AUMs with

redemptions ~ 10%

Wholesale and institutional channels will drive future growth

P/E Multiple Model Dividend Discount Model

Assumptions: Sustainable Growth Rate CAPM5% Net Sales Growth Rrf 31% Reinvested Dividends earnings retention rate: 38.45% beta 1.736% Market Appreciation ROE: 32.27% Rmp 7

17.1x Fwd P/E (historical average) dividend growth rate: 12.41%Rs 15.11

P/E MultipleP/E Multiple

12.0x 17.1x 20.0xMy Est. 2011 EPS 1.97 $23.62 $33.66 $39.37 Year 2006 2007 2008 2009 2010 2011

2012 EPS 2.18 $22.68 $32.32 $43.51 EPS $0.55 $1.49 $1.12 $1.23 $1.83 $1.97DPS $0.60 $0.68 $0.76 $0.76 $0.77 $0.85

BAC Est. 2011 EPS 2.07 $24.84 $35.40 $41.40 Payout Ratio109.09% 45.64% 67.78% 61.58% 42.00% 43.18%2012 EPS 2.15 $22.41 $31.94 $37.36 ROE 18.74 40.07 27.41 30.62 37.99 38.81

PV: $33.33 PV: $35.40

Current Price: $26.97 Market return: 27.41%Dividend Yield: 3.85%

1yr Target Price: $34.36 Total Return: 31.26%

Ivy Asset Strategy – flagship product with 33% of WDR’s AUM

World Allocation strategy targets all asset classes

Sharp 19% drop in fund value from July – Oct.

Recently downgraded to 3 from 4 stars by Morningstar

Strengths WeaknessesGood relative performance Product concentrationHistorically strong fund flows Financial market sensitivityStrong advisor base reduces redemptions

Asset Strategy fund underperformance

Opportunities ThreatsDiversification among products Deterioration in global equity

marketsInexpensive beta play Higher correlation among asset

classesGrowing awareness of Ivy Funds brand

Fierce competition for fund flows

As one of the more attractively priced asset managers, WDR currently provides a discounted beta play on the broader U.S. equity market. Longer-term, the successful performance and growing name recognition of the Ivy Funds brand should contribute to above average growth in AUM.

BUY 500 shares of WDR at limit of ~$27 ($13,500)

Total position: 500 shares / 2.8% of portfolio (after purchase)

Financials Target Sector Allocation: 10.5%, Current Sector Allocation: 11.1% Allocation after purchase: 13.9%